| | | From Briefing.com: 4:20 pm : The major averages ended their day on a higher note as investors deciphered recent remarks from Fed Chair Yellen about the economic outlook and monetary policy. Other focal points for today's trade included strength from the oil patch, continued softness in the dollar, relative weakness in safe-haven areas, and key sector leadership from the heavily-weighted industrial (+0.8%) and financial (+0.6%) sectors. The major indices ended the session off their best levels of the day as selling interest picked up just ahead of the close. In doing so, the S&P 500 (+0.5%) failed to close above its prior intraday high this year of 2111.05, yet it still logged a new closing high for the year.
The benchmark index managed to set a new intraday high for the year (2113.36) following mixed remarks from Fed Chair Yellen.
Ms. Yellen stated in prepared remarks that she remains positive on the economic outlook of the U.S. economy and warned that too much significance should not be assigned to one monthly report. However, Ms. Yellen also stated that last Friday's Employment Situation Report was concerning on balance.
Cues for a potential rate hike "in the coming months" were noticeably absent from her speech, but she maintained that further gradual increases in the federal funds rate are likely to be appropriate and conducive to meeting and maintaining the Fed's dual mandate.
Eight sectors ended the session with gains. The commodity-sensitive energy (+2.0%) and materials (+0.9%) sectors led the way, followed by the industrial (+0.8%), financial (+0.6%) and health care (+0.6%) sectors. On the other side of the board, the countercyclical utilities (-0.2%) and telecom services (UNCH) sectors were the only two sectors to end the day with a loss.
The Dow Jones Industrial Average (+0.6%) ended ahead of the Nasdaq Composite (+0.5%) and the S&P 500 (+0.5%).
The energy space (+2.0%) showed broad-based strength as oil prices increased 2.1% ($49.73/bbl, +$1.04). The energy component benefited from a softening dollar and potential supply worries out of Nigeria. In the group, ConocoPhillips (COP 42.52, +1.34) and Anadarko Petroleum (APC 53.28, +1.89) gained 3.0% and 3.7%, respectively.
In the industrials sector (+0.8%), aerospace names outperformed as they traded higher in sympathy with Boeing (BA 131.90, +4.52). The Dow component gained 3.6% and led the price-weighted index as investors weighed a potential contract with Iranair. Conversely, Delta Air Lines (DAL 41.28, -0.29) and CSX (CSX 26.50, -0.14) ended at the bottom of the Dow Jones Transportation Average (+0.6%).
The financials sector (+0.6%) finished off its best level of the day, yet it recouped a good portion of its 1.4% loss from Friday. The sector saw broad-based strength with regional banks, asset management companies, and life insurance names leading the advance. Rate-sensitive real estate investment trusts (REITs) underperformed as Equity Residential (EQR 63.62, -1.35) and Welltower (HCN 69.82, -1.50) lost 2.1% apiece.
In the consumer discretionary space (+0.1%), Dow component Home Depot (HD 129.19, -2.55) finished at the bottom of the price-weighted index, held back by some bearish commentary at Cleveland Research.
Biotechnology finished ahead of the broader market as the iShares Nasdaq Biotechnology ETF (IBB 286.07, +4.30) gained 1.5%. Valeant Pharmaceuticals (VRX 28.85, -0.02) ended flat ahead of Tuesday morning's quarterly earnings report.
The U.S. Dollar Index (94.00, -0.03) ended slightly lower, coughing up some overnight gains. The euro/dollar pair finished flat at 1.1362 while the dollar gained 1.0% against the yen (107.62).
Losses were seen across the yield curve. The yield on the benchmark 10-yr note rose three basis points to 1.73% while the yield on the 2-yr note increased two basis points to 0.80%.
There was no economic data of note released today.
Tuesday's economic data will include the revised estimate for first quarter Productivity (Briefing.com consensus -0.6%) and Unit Labor Costs (Briefing.com consensus 4.0%), which will cross the wires at 8:30 ET. Separately, Consumer Credit for April (Briefing.com consensus $18.5 billion) will be released at 15:00 ET.
- Russell 2000 +3.7% YTD
- S&P 500 +3.2% YTD
- Dow Jones +2.8% YTD
- Nasdaq Composite -0.8% YTD
DJ30 +113.27 NASDAQ +26.20 SP500 +10.28 NASDAQ Adv/Vol/Dec 2122/1.523 bln/859 NYSE Adv/Vol/Dec 2118/857.3 mln/928 3:30 pm :
- The dollar index breaches the 94.00 level to the downside, boosting commodities, currently down -0.1% around 93.93
- Commodities, as measured by the Bloomberg Commodity Index, are up +1.1% at 88.11
- Crude oil closes near 7-month highs, supported by comments from the Fed, last week's EIA data showing a draw on all fronts, Canadian production still struggling to ramp up to pre-wildfire levels, & a weak dollar
- July crude oil futures rose $1.04 (+2.1%) to $49.73/barrel
- Natural gas surges, continuing last week's notable uptrend after stalling in the previous session, closing at highs of the session
- July natural gas closed $0.07 higher (+2.9%) at $2.47/MMBtu
- In precious metals, gold sees marked volatility after the Fed speech, briefly trading below the 1242 level before bouncing back and consolidating near the highs of the day
- August gold ended today's session up (+0.4%) $4.40 to $1247.40/oz
- Silver sees an afternoon of consolidation, closing higher on the day
- July silver closed today's session $0.09 higher (+0.6%) at $16.45/oz
- Base metal copper inches up as the dollar wanes
- July copper closed $0.01 higher (+0.5%) at $2.12/lb
- Grain prices close notably higher ahead of today's USDA crop report, scheduled to be released at 4 pm ET today
- July corn closed $0.08 higher (+1.9%) at $4.27/bushel
- July wheat closed $0.11 higher (+2.2%) at $5.07/bushel
- July soybeans closed $0.05 higher (+0.4%) at $11.39/bushel
- July sugar closed $0.01 higher (+5.6%) at $0.19/lb
- Weather continues to play a notable role in grain prices, as crops are in the emergence stage
- Weather Update:
- In the Corn Belt, cool, breezy weather is arriving across the upper Midwest, accompanied by isolated showers
- Across the remainder of the Corn Belt, warm, dry weather favors crop growth and late-season planting efforts
- In the South, the interaction between Tropical Storm Colin and a cold front is resulting in locally heavy showers from the central Gulf Coast to the southern Atlantic region
- In the West, isolated showers are confined to the northern Inter-mountain region. Elsewhere, hot, dry weather is promoting fieldwork and a rapid crop development pace. Record-setting heat persists in the Northwest.
Today's session began on a higher note as investors weighed diminished expectations regarding the pace of interest rate normalization in the coming months. Participants reviewed their assessment on the short-term path of the fed funds rate following Friday's below-consensus reading of the Employment Situation Report for May. The fed funds futures market currently assesses the likelihood of a rate hike at the June meeting at 6.0%, declining from Thursday's pre-jobs data reading of 21.0%.
The broader market kicked off the week with modest gains, as the session was decidedly positive following Fed Chair Janet Yellen's remarks today regarding a disappointing May jobs report on Friday, Chair Yellen largely stuck to her outlook, calling for a gradual increase in rates over time, while acknowledging the weak May jobs data. She noted that there is a great deal of uncertainty in the outlook. Clearly, the Fed remains data dependent. A June rate hike is off the table after Friday's dismal jobs report and ahead of the Brexit vote, which has the potential to dislocate financial markets. To that end, the broader market began the week in the green, as the Dow Jones Industrial Average helped us higher, adding 113.27 points (+0.64%) to 17920.33. The Nasdaq Composite followed, up 26.20 points (+0.53%) to 4968.71, and the S&P 500 closed the session with a 10.28 points (+0.49%) advance to end 2109.41.
Following Friday's modestly lower finish, the Technology (XLK 44.03, +0.09 +0.20%) sector took back most of the losses. Components XRX +2.39%, AKAM +1.83%, FSLR +1.83%, CSC +1.52%, YHOO +1.28%, ADS +1.27%, TXN +1.26% all out-performed. Other sectors as measured by the S&P closed the session XLE +2.21%, XLB +1.03%, XLI +0.95%, XLF +0.60%, XLV +0.54%, IYZ +0.42%, XLY +0.25%, XLP +0.11%, XLU -0.14% as Energy posted the best gains on the back of a nearly +2.1% day in July Crude Oil Futures.
In the S&P 500 Information Technology (729.89, +2.23 +0.31%) sector, action was religiously to the upside, ending just off session highs. Component HP (HPQ 13.67, +0.23 +1.71%) was a notable out-performer today as the company announced a collaboration with Smurfit Kappa (SMFKY 27.29, +0.09 +0.33%) to develop the recently announced digital corrugated post-print solution, the HP PageWide C500 Press. Other names in the space which closed modestly higher today included HRS +1.18%, TEL +1.13%, STX +1.06%, CTXS +0.96%, WU +0.87%, ORCL +0.87%, V +0.75%, AAPL +0.73%, MSFT +0.66%.
Other notable news items among sector components:
Activision Blizzard (ATVI 37.76, -0.05 -0.13%) filed for about 171.9 million common share shelf offering for selling shareholders. The proposed max offering price is $38.48 per share.
Activision Blizzard's (ATVI) Blizzard Entertainment and Facebook (FB 118.79, +0.32 +0.27%) announced functionality in the form of Facebook login collaboration on certain Blizzard PC titles.
HP Inc. (HPQ) announced Smurfit Kappa (SMFKY) entered into a strategic collaboration agreement with HP to further develop the recently announced digital corrugated post-print solution, the HP PageWide C500 Press.
Cubic Transportation Systems (CTS), a business unit of Cubic (CUB 41.42, +0.88 +2.17%), announced the launch of NextTraffic, a transportation and traffic management solution using Microsoft's (MSFT 52.13, +0.34 +0.66%) Azure Cloud.
Hewlett Packard Enterprise (HPE 18.90, +0.54 +2.94%) has teamed with Paramount Pictures (VIAB 45.43, +0.43 +0.96%) to imagine technology 250 years into the future for the upcoming Star Trek Beyond feature film from Paramount Pictures and Skydance set for worldwide release beginning July 20. The upcoming film will include several futuristic concept technologies created exclusively for the movie based on HPE's The Machine, a groundbreaking research project being developed by the company. Also in connection with the film, HPE will debut a new advertising campaign featuring The Machine, the first prototype of which is slated to launch later this year.
Elsewhere in the tech space:
Yingli Green Energy (YGE 4.60, +0.86 +22.99%) anticipates its net income for Q1 turned positive for the first time since 3Q2011. Further, the company sees shipments at the high end of guidance and gross margins higher sequentially.
Baidu (BIDU 174.62, +0.88 +0.51%), Tencent (TCEHY 22.57, +0.49 +2.22%) and JD.com (JD 23.32, +0.34 +1.48%) jointly announced they have entered into definitive agreements pursuant to which BIDU, TCEHY and JD each agrees to invest $50 million in Bitauto Holdings (BITA 22.95, +2.49 +12.17%).
Priceline (PCLN 1349.10, +47.39 +3.64%) named Brett Keller as Interim Chief Executive Officer of its subsidiary, priceline.com, effective immediately.
KFit Holdings Pte Ltd signed a deal to acquire Groupon (GRPN 3.58, +0.06 +1.70%) Indonesia at an undisclosed fee. The acquisition will see KFit enter the Indonesian market with Groupon Indonesia as a wholly-owned subsidiary of KFit, while Groupon Inc will become a strategic shareholder of KFit.
Rambus (RMBS 12.31, +0.03 +0.24%) to acquire the assets of Semtech's (SMTC 24.16, +0.26 +1.09%) Snowbush IP for $32.5 million as well as additional payments based upon specific new product sales through the end of 2022. This acquisition remains subject to customary closing conditions and is expected to close during the third quarter of 2016. These acquired technologies will be part of the Rambus Memory and Interfaces Division and Rambus expects this acquisition to be accretive within 18-24 months.
ManpowerGroup (MAN 79.06, +0.27 +0.34%) signed a purchase agreement with Ciber (CBR 1.56, +0.37 +31.09%) to acquire its Dutch business. Financial terms of the deal were not disclosed.
CTS Corp (CTS 18.65, +0.28 +1.52%) will implement additional organizational changes in North America. Starting next year, CTS will phase out production at its Elkhart plant by mid-2018 and transition the existing location into a Research and Development Center supporting the company's global operations. Certain actions are also being taken at other locations to simplify operations. About 230 employees will be impacted over the course of the transition.
Zetta Jet selected ViaSat (VSAT 74.01, +0.93 +1.27%) to supply global in-flight internet service for its customers desiring faster, more reliable in-flight connectivity on its Bombardier Global ultra-long range business aircraft.
eFuture Holding (EFUT 5.63, +0.18 +3.30%) announced receipt of an unsolicited preliminary non-binding proposal to acquire all the remaining outstanding ordinary shares from its controlling shareholder, Shiji (Hong Kong) Limited, which presently owns 2,744,857 shares, represented 52.37% of the outstanding ordinary shares as of June 5, 2016, for $6.32 in cash per share. Earlier this year, Shiji nominated and appointed six members of the Board of Directors, who are presently serving on the Board of a total eleven members.
Aspen Technology (AZPN 39.54, +0.45 +1.15%) acquired Fidelis Group, LLC of Lake Jackson, Texas. Financial terms of the deal were not disclosed.
Pandora (P 12.17, -0.35 -2.80%) announced a partnership with Music Reports to manage the mechanical licensing and royalty administration for its upcoming interactive streaming service.
Helios & Matheson (HMNY 7.21, +6.17 +600.00%) and Zone Technologies announced plans to merge.
T-Mobile US (TMUS 43.07, -0.56 -1.28%) announced a customer program called Stock Up which will reward customers with TMUS shares for recommending T-Mobile to their friends. Customers can earn up to 100 shares of TMUS a year for every primary account holder who takes their recommendation and switches to TMUS.
Analyst actions:
GRUB was upgraded to Buy from Neutral at Monness Crespi & Hardt; QLIK was downgraded at Mitsubishi UFJ and SunTrust, CUDA was downgraded to Mkt Underperform from Mkt Perform at JMP Securities; SNPS and CDNS were initiated with Outperform ratings at RBC Capital Mkts, CGNX was initiated with a Mkt Perform at Bernstein |
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